Offshore Asset Protection BLOG - Bob Bauman

Tax Evasion = Jail Time

In his Thoughts on Government, the second U.S. president, John Adams of Massachusetts, sagely observed that: "Fear is the foundation of most governments."

Based on its tax enforcement policies, the U.S. Internal Revenue Service could easily adopt that as its official agency motto.

Exhibit A: A "very sorry" Wesley Snipes, Hollywood star of the "Blade" movies, was sentenced to three years in prison last week for willfully failing to file U.S. income tax returns for 1999 through 2001. Snipes was convicted on three misdemeanor tax evasion counts.

U.S. District Judge William Terrell Hodges handed down the maximum sentence and said he felt it was important to create a general deterrent against tax defiance. Prosecutors said Snipes had earned more than $38 million since 1999 but still had not filed tax returns for the years 1999 through 2007 nor paid any taxes.

"I am very sorry for my mistakes and errors," Snipes told the judge. "This will never happen again." Sorry Wesley. Too little, too late.

Co-defendant Eddie Ray Kahn, a longtime tax protester who coached clients of his American Rights Litigators on supposedly how to beat the tax system, was sentenced to 10 years in prison. Co-Defendant Douglas Rosile, whom prosecutors called a "defrocked certified public accountant," was sentenced to 4-1/2 years for his part in the scheme. Both were convicted of conspiracy and tax fraud.

Fear Factor

As in the tax evasion case of the late millionairess Leona Helmsley who went to jail, with the Snipes the IRS wanted a show trial so that all taxpayers would be scared into unquestioning obedience to the laws "by pursuing a few prominent cases, making examples of those it judges to be violators" as The New York Times noted.

As a libertarian and a conservative I view taxes as, at best, a necessary evil.

I believe that when government takes wealth from some and gives it to others, it diminishes the rights and well being of the former, and often destroys the independence of the latter. The issue of taxation involves nothing less than the human and natural right to own, use and enjoy private property. Property and wealth determine personal power to control our own lives, to make decisions, and to live free. Every additional tax diminishes our freedom.

Nevertheless, the 16th Amendment to the U.S. Constitution granted the Congress the power to "... lay and collect taxes on income, from whatever source derived, without apportionment among the several states and without regard to any census or enumeration."

And, oh boy, the politicians have had a wonderful time ever since, laying and collecting taxes.

Enforced Exactions

Notwithstanding that language, it should be balanced by the statement of the late, distinguished Judge Learned Hand of the U.S. Court of Appeals in New York. In a memorable tax case dissent, Judge Hand offered these timeless remarks: "There is nothing sinister in arranging one's affairs so as to keep taxes as low as possible... nobody owes any public duty to pay more than the law demands. Taxes are enforced exactions, not voluntary contributions." Commissioner v. Newman, 159 F2d 848, 851 (2nd Cir 1947).

Charles Cain, editor of Offshore Investment, in an editorial rightfully charged that "the line between tax avoidance and tax evasion is purposely being blurred by governments, with honest people (and their tax advisors) being jailed for failed attempts at tax avoidance while tax evasion is put down on a moral level with heroine and cocaine pushing."

A great deal of time and effort on our part goes into exploring and explaining legal ways by which you can avoid, minimize, and defer taxes -- I repeat -- legal ways.

In the first page of every one of our book publications the following text appears:

The Sovereign Society advocates full compliance with applicable tax and financial reporting laws. U.S. law requires income taxes to be paid on all worldwide income wherever a U.S. person (citizen or resident alien) may live or have a residence. Each U.S. person who has a financial interest in, or signature authority over, bank, securities, or other financial accounts in a foreign country that exceeds $10,000 in aggregate value, must report that fact on his or her federal income tax return. An additional report must be filed by June 30th of each year on an information return (Form TDF 9022.1) with the U.S. Treasury. Willful noncompliance may result in criminal prosecution. You should consult a qualified attorney or accountant to insure that you know, understand and comply with these and any other reporting requirements.

The Biblical admonition to "'render unto Caesar" does not mean we have to surrender unto Caesar, and we shouldn't.

* To find out offshore places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Black Comedy or White Slavery?

In a recent exchange between Comedy Central's witty host Jon Stewart and Democrat presidential candidate, Sen. Barack Obama (D-Ill), Stewart asked:

"Sir, we are concerned that ultimately at the end of the day, if you are fortunate enough to get the Democratic nomination, fortunate to become President of the United States, will you pull a bait-and-switch, sir, and enslave the white race? Is that your plan? And, if it is your plan, be honest. Tell us now."

Laughing, Sen. Obama replied:

"That is not our plan Jon, but I think your paranoia might make you suitable as a debate moderator."

O.K., so Stewart's question was a joke, but the underlying assumptions become less than amusing when one looks deeper into the possibilities of future enslavement inherent in what is being proposed by candidates for president in the 2008 campaign -- and that observation goes for all potential presidents - the Senators Three, Obama, Hillary Clinton and John McCain.

Slave or Free?

Enslavement, (not a word you hear much about these days), is the act of making slaves of other human beings who are your captives. Maybe you never thought about it, but a slave is a person who is the property of, and wholly subject to, control of another. There was a time in the United States when slavery was not only legal, it required a five-year Civil War, the deadliest in American history, causing 620,000 deaths, to settle the issue.

In March of 1857, in the infamous Dred Scott decision, seven out of nine Justices on the U.S. Supreme Court, (with my fellow Marylander, Chief Justice Roger Brooke Taney writing the opinion), declared no slave or descendant of a slave could be or ever had been a U.S. citizen. As a non-citizen, the court said, Dred Scott had no rights, could not sue in a Federal Court and must remain a slave.

It required the Thirteenth Amendment to the United States Constitution, adopted in December 1865, officially to abolish and prohibit slavery, with limited exceptions, such as those convicted of a crime.

White Slavery?

Largely ignored in American history books, (and probably unknown to Jon Stewart when he asked his question), there was an early class in America that could be called "white slaves."

Mainstream histories refer to these laborers as "indentured servants" not slaves, because many agreed to work for a set period of time in exchange for land and rights.

In a new book, White Cargo: The Forgotten History of Britain’s White Slaves in America, (N.Y.U. Press), authors Don Jordan and Michael Walsh argue, however, that slavery applies to any person who is bought and sold, chained and abused, whether for a decade or a lifetime. Many early American settlers died long before their indenture ended or found that no court would back them when their owners failed to deliver on promises. And many never achieved freedom or the American dream they were seeking.

So what are we to make of the true status of those of us who are privileged to live in what we often refer to as "the land of the free" -- the United States of America?

Each year every dollar the average American earns up until the third week of April goes to government in taxes!

So in reality there is another, more subtle form of slavery in America and its growing exponentially.

Realize it or not, we live and labor under tax and regulatory control of nearly every aspect of our lives -- ranging from a compete abolition of personal and financial privacy, (i.e the PATRIOT Act and illegal surveillance of all kinds), to burdensome taxation that confiscates our fortunes to finance the ever growing welfare state, either by massive deficit spending or political robbery of the value of our currency.

And what has fate so cruelly handed Americans for leadership in this time of troubles?

Not a Trillion's Worth of Difference

Hillary Clinton and Barack Obama both propose major changes to the tax code that would add to its complexity and increase taxes. His plan, like that of the late Senator Huey Long of Louisiana, emphasizes income redistribution, while her "nanny" approach seeks to force changes in Americans' behavior. Obama's proposal would shift the tax burden further on to "the rich" that already pay almost all taxes. Clinton proposes targeted tax breaks designed to change the way Americans use energy, save money and care for elders.

Both candidates would allow President George W. Bush's tax cuts to expire for workers in the top two tax brackets and set the estate-tax rate at 45% with a $7 million exemption. Obama wants tax rates on capital gains and dividends to rise from the current 15% rate to perhaps as high as 28%. Clinton would also raise the rate on investment income. The centerpiece of Obama's tax plan is a $1,000 tax cut for workers that would cost more than $80 billion annually and effectively eliminate all taxes for about 10 million low income Americans.

Meanwhile, John McCane, who calls himself a "conservative," panders to supply side Republicans by proposing to extend and expand tax cuts that can only increase the annual national deficit and the $9.4 trillion national debt. By the time President Bush leaves office, he will have added nearly $3 trillion to that national debt. Thank you, George! No thank you, John!

As an article in The New York Times observed Sunday: "The Republican and Democratic presidential candidates differ strikingly in their approaches to taxes and spending, but their fiscal plans have at least one thing in common: each could significantly swell the budget deficit and increase the national debt by trillions of dollars, according to tax and budget experts."

The Offshore Solution

Now I know I am beginning to sound like a broken record, (or a skipping CD), but there are only so many ways to describe how best to protect yourself from  government-imposed indentured servitude and financial slavery -- regardless of your race, color or ethnic background.

The first step is to open one's eyes and recognize the dire situation as it is -- then to take proactive action to defend and expand your diminished freedoms.

With the dollar shrinking in value daily, with American freedoms and civil liberties curtailed, with bipartisan deficit government spending continuing unchecked, you well may need the help we can and will provide.

Why would any reasonable person choose slavery over freedom? As I have said before: "Wherever real freedom can be found, that's where freedom lovers should be."

* To find out all about places where you will be able to increase your freedom, click here http://web-purchases.com/190STHOW/W190H723/

Luxembourg Quietly Thrives as Corporate Tax Haven

Over the years I have not written a lot about the Grand Duchy of Luxembourg as one of Europe's leading tax havens -- although it most definitely fits that definition by any standard. That's because the tiny nation is primarily a business and banking haven, rather than a personal tax haven.

Indeed, the official government line is that Luxembourg is not a tax haven, only a leading "international financial center."

As American youngsters are wont to say when something makes only a trivial difference: "Whatever!"

Luxembourg’s citizens know that their economy has thrived because of the attraction of its fund industry and banks as leaders in the European market for worldwide investors. However the official government attitude is stated by the prime minister’s spokesperson: "We do not consider ourselves as a tax haven," he said recently.

Grand Old Duchy

Situated in the heart of Europe, it is well known that the Grand Duchy, one of the founding members of what became the European Economic Community (EEC), and now one of the richest EU member states, derives its prosperity from its status as Europe’s #1 investment fund center and as one of the world’s leading hubs for global fund clearing and distribution, as well as home to thousands of virtually tax exempt corporate holding companies. Over 22,000 persons are employed directly or indirectly in the nation's more than 200 banks and upwards of 20% of the GDP flows from the banking business.

In spite of the usual leftist media blitz against tax havens in February after the German government broke the law paying a multi-million euro bribe for a stolen bank client list from nearby Liechtenstein, Luxembourg, with bank secercy laws almost as strict as those of Liechtenstein, is hardly nervous about the future.

Together with Belgium and Austria, Luxembourg remains an exception to EU anti-bank secrecy rules and its laws still prohibit revealing bank information to the outside world, except in criminal matters. If you want a no-nonsense EU base for business operations and excellent private banking services, this is the place. Here bankers act as stock brokers and investment managers as well.

The Grand Duchy’s Central Bank governor, Yves Mersch, described financial privacy as "...part of our social consensus. Confidentiality in a small country is extremely important for the maintenance of democratic rule." The Grand Duchy's treasury minister, Luc Frieden, states that "...the system of [EU tax directive] withholding tax works well. We transfer quite an impressive amount of tax to other member states of the European Union. We should not change things again that work well."

Dirty Money?

Of course the "usual suspects" on the Left see Luxembourg, (or any place fortunate to have strong financial privacy laws), as a sinister place harboring dirty money and tax evasion.

But a local lawyer echoes my usual mantra, saying: "A clear distinction should be drawn between tax avoidance and money laundering. It is a question of perspective. The fight against money laundering where the origin of funds comes from gun smuggling or drug trafficking is far different than avoiding tax. In Luxembourg failing to report earned income is not considered a crime. Luxembourg's investment and bank funds are strictly authorized and supervised by the financial regulator, the "Commission de Surveillance du Secteur Financier" (CSSF). If banks or other professional have the slightest suspicion about a transaction, they are under obligation to inform the respective authorities without delay."

Even after all the recent fuss about Liechtenstein, Treasury Minister Frieden drew the line: "Luxembourg’s government sees no need and will not come up with new proposals to change the bank confidentiality rules; they have proven to be in the interest of a good working system in Europe."

* To find out all about Luxembourg and other places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Monaco with Bananas

In an enthusiastic article about Panama and its many virtues playfully entitled "Monaco With Bananas," Forbes magazine recently asked the question: "Who needs Liechtenstein or the Isle of Jersey? We've got a lovely tax haven right in this hemisphere."

Who indeed?

Along with a growing throng, Forbes has rediscovered the favorite tax haven of the Americans -- the Republic of Panama.

In a quick review of more than a century of it national history Forbes recalled that the defining event occurred when "...Panama granted the U.S. 'sovereign rights' to a 500-square-mile zone down the center of the country at its independence in 1903; in 1914 the U.S. linked the Pacific and Atlantic oceans with a canal. Poverty festered and the Panamanian military periodically undermined the nation's democratic credentials, most famously in the 1980s when the drug-money-tainted dictator Manuel Noriega was overthrown by the U.S. It was only in 1999 that the U.S. completely relinquished rights to the canal." And Panama has no tax treaty with the U.S.

Free at Last

Forbes goes on to say: "America's recent exit was in some ways the real birth of Panama. This lively backwater--famous mostly for flying maritime flags of convenience and hosting dodgy finance--seems to have found its voice. Democratically elected governments have clamped down (somewhat) on corruption, signed several free trade agreements (the U.S. Congress has yet to ratify a 2007 deal with Panama) and instituted tax and social reforms."

But just as many other outside observers who have recently discovered the New Panama, Forbes marvels at Panama today, (as well they might).

Panama's GDP has been compounding at 7% during the last five years. Panama's corporate tax rate is 30% and levied only on local income. The U.S. 35% federal corporate tax burden is, in contrast, the second highest in the world and applies to almost all global income. Caterpillar, Procter & Gamble and Hewlett-Packard have all recently announced significant investments in Panama. The personal income tax, capped at 27%, is also limited; and foreigners resident in Panama don't pay Panamanian taxes on their offshore investments.

Boom Goes On

Of course the article takes note of the continuing condo building boom in Panama City, plus major developments of former U.S. properties by British and other foreign investors.

But don't take Forbes or our word for it -- seeing Panama is believing.

Come on down and join us at the Sovereign Society's 20th Annual Total Wealth Symposium, May 14th-17th at the Sheraton Panama Hotel & Convention Center, Panama City, Panama.

PS: Reserve your seat right now for our 20th Total Wealth Symposium, and you can receive a special discount. Click here for details. http://www.isecureonline.com/reports/CJ5191A/E191J5000/

Very Bad Money

A New York Times book reviewer writes today: "At a time when the Cassandras of finance are looking like realists, there is no gloomier prophet than Kevin Phillips. The author of 13 previous books including at least one classic, The Emerging Republican Majority (1969), Mr. Phillips sees a perfect economic storm coming. The final pages of his bleak new book, Bad Money, tell of an "unprecedented" number of Americans planning to leave the country or thinking about it. Readers of Bad Money may come away with a similar impulse to flee."

That Americans are fleeing is hardly news to our members and readers.

For the decade since our founding, we at the Sovereign Society have noted sadly that each year upwards of 400,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. Admittedly, that number pales against the millions clamoring to get into the U.S., legally and otherwise.

But there's a huge difference in the economic status of these two groups.

Those seeking admission (or just crossing our borders) are, by and large, poverty stricken persons desperately trying to better their lot with a new life in the promised land. They'll settle for low paying jobs, welfare, free education for their kids, and U.S. taxpayer subsidized housing and health care.

Tax Base Is Leaving

But a large part of the 400,000 exodus is made up of wealthy people seeking to escape the growing tax and regulatory tyranny aimed right at them by the United States government. And it is this gusher of fleeing rich people who take with them U.S. wealth -- and the U.S. tax base. These are the very people who pay for the all those programs the new immigrants covet.

Two years ago next month I referred readers to what was then Kevin Phillips' latest book, American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century. In it he put together an amazing array of historical, religious, economic and political data to argue that the U.S. was about to join its imperial predecessors on the downhill slide - Rome, Spain, the Netherlands and Britain.

But what was particularly prescient of Phillips in his 2006 book was one of the two major reason he saw, (his first was the decline in industrial and manufacturing base), as causes for America's decline -- an increase in what he called "financialization" of all sorts of intangible financial services that replaced tangible production.

Slow Moving Train Wreck

This astute observation was made well before shocked Americans and the world were to learn about the sub-prime mortgage crisis and before scores of billions of dollars worth of bank and financial losses -- due in large part to the phony "financialization" Phillips warned against.

As Phillips showed, a lot of these modern "financial services" consist of little more then creating new forms of debt, then pushing all those debt papers around while collecting fees for doing nothing really productive.

In his new book, Bad Money, Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, (Viking Press 2008), Phillips brings us up to date on what one security analyst quoted in the book calls "one of the slowest moving train wrecks" in history.

Phillips gives an overview of the current debt debacle and notes that the 1980s were the start of "three profligate decades," when the expansion of mortgage credit and the invention of financial instruments like collateralized debt obligations (CDO’s) led to an orgy of leveraging and irresponsible speculation. Greenspan's Federal Reserve kept the bubble afloat with easy money, while federal regulators and credit and bond ratings agencies looked the other way.

By 2007, total American indebtedness was three times the size of the gross domestic product, a ratio that surpassed the record set in the years of the Great Depression. From 2001 to 2007 alone, domestic financial debt grew to $14.5 trillion from $8.5 trillion, and home mortgage debt ballooned to almost $10 trillion from $4.9 trillion, an increase of 102 percent.

The Offshore Solution

With the dollar shrinking in value daily, with American freedoms and civil liberties curtailed by unconstitutional monstrosities such as the so-called PATRIOT Act, with deficit government spending continuing unchecked, is it any wonder reasonable Americans who have the means are considering life elsewhere?

Ten years ago we saw this coming. That's how the Sovereign Society came into being.

We offer our members a detailed road (and trans-oceanic) map to profitable offshore investments, to greater freedom offshore; a step-by-step explanation of legal ways to protect assets, lower taxes, and -- yes -- how (and where) to move your residence and/or citizenship offshore -- if that's what you want.

Wherever real freedom can be found, that's where freedom lovers should be.

To find out all about places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Panama Extends Real Estate Tax Exemption

I often promote Panama as one of the most "foreign friendly" nations in the world -- because it is.

In addition to special investment and business visas available by law, the popular pensinado program allows qualified foreigners to acquire quick residence permits, move in and enjoy tax breaks and discounts on goods, services and imports of household furnishings, autos and boats.

But there are also real estate tax breaks worth tens of thousands of dollars to ex-pats who retire in this peaceful haven or who buy second homes here. Investors have rushed in too and high-rise condos, hotels and shopping centers have sprung up like tropical flowers, with the Panama City skyline a forest of construction cranes and new skyscrapers.

Indeed, these unique incentives have brought in thousands of foreign residents, spurred a national economic boom and created many needed jobs. (Meanwhile, the multi-billion dollar expansion of the Panama Canal is already underway).

Future Prosperity

Nay sayers have talked a lot about the "real estate bubble" being about to burst -- but reports this week confirm that Panama's current prosperity will continue.

Panama now has Latin America's highest economic growth, (Mexico has the lowest), according to new data from the International Monetary Fund (IMF). Panama will see GDP growth of 7.7% this year and 7.2% next. That's the highest rate in Latin America and follows Panama's 2007 phenomenal growth of 11.2%, one of the world's highest, the best in the region and the best GDP growth in Panama's recent history, according to IMF data for the past 27 years.

Quick Action Needed

But you need to act soon to benefit from the much coveted Panama real estate tax exemption law. Imagine buying or building a new home anywhere in the United States (or any country) and being given a real estate tax exemption on your new property for 20 years!

Under Panamanian laws in the recent past, a foreign resident who built a new house or condo paid no real property taxes for up to 20 years. This exemption has been extended several times and did expire, but the Torrijos government and the Legislative Assembly just adopted a new extension. Although there has been lots of talk and uncertainty, yesterday the exemption law became official when published in the Official Gazette (Gaceta Oficial).

Under the terms of the extension law foreigners who build new construction have until July 1, 2009 to obtain a building permit, and to December 31, 2011 to acquire the occupancy permit. One source in Panama suggests that anyone wishing to take advantage of this 20-year tax exemption needs to act within the next 8-10 months in order to get everything done in time. For more information, see http://primapanama.blogs.com/_panama_residential_devel/2008/04/you-have-about.html

When purchasing an already existing building in Panama, a foreign buyer may be eligible for tax exemptions that were applied in the past to the property. If you are buying relatively new construction property, check to see if it is tax exempt under a prior owner or builder’s original exemption, since the tax exemption travels with the land to new owners, even though the number of remaining years may have been reduced.

Mucho Mas!

We will explain this tax exemption and much more (mucho mas!) at the Sovereign Society's 20th Annual Total Wealth Symposium, May 14th-17th at the Sheraton Panama Hotel & Convention Center, Panama City, Panama. Speakers will tell you everything you need to know in order to obtain residence, not only in Panama, but in other tax havens where you might wish to make a second home. I invite you to join us and I hope to see you in Panama.

PS: Reserve your seat right now for our 20th Total Wealth Symposium, and you can receive a special discount. Click here for details.

Avoidance Is Its Own Reward

The late, influential and decidedly liberal economist, John Maynard Keynes, (1883 - 1946), once sagely observed: "The avoidance of taxes is the only intellectual pursuit that carries any reward."

What a kidder that Keynes was. Surely he knew that many other intellectual pursuits, (reading, writing, philosophizing, dreaming about money or sex), also has intellectual rewards. 

It was certainly with the worthy goal of legal tax avoidance that this week Shire Pharmaceutical, a leading British drug firm, announced plans to relocate to Dublin for tax purposes.

Irish Tax Haven

Ireland is well known for having one of the lowest corporate tax rate (12.5%) among the 27 EU nations. (Only Cyprus is lower with a corporate tax of 10%). That Irish low tax compares with a hefty 28% tax in the U.K. But, according to reports, what bugs Shire and a host of other companies is Britain's policy on foreign dividend income. Many countries, including Switzerland and the Netherlands, have holding company tax regimes that enable firms to import dividends tax-free from foreign subsidiaries. Only profits earned within the country are taxed. Shire says it is moving not by a desire to avoid tax, but out of concern that Britain will tighten up rules further with anti-avoidance measures that will harm multinationals, such as Shire, that earn profits from a many overseas subsidiaries.

Other companies have already voted with their feet. Shire is the first FTSE 100 company to shift its domicile, but tax advisers say that a number of others are considering it. The big drug firm is following Experian to Ireland, and Yahoo and Kraft Foods recently moved their European headquarters from Britain to lower tax Switzerland.

The Labour government doesn't seem to realize that higher taxes on business and the rich are self-defeating, sending mobile taxpayers to greener low-tax pastures. Recent changes to the UK tax regime - including a £60,000 (US$30,000) annual tax for non domiciled foreign workers in the U.K. – and present discussions about the rules governing overseas corporate earnings, give British companies with big international operations major concern.

More Taxes to Come?

Is the Labour government going to make the UK tax environment even less attractive? Shire isn't waiting to find out. It's shifting domicile to Dublin, where the corporate tax regime is already more friendly. And a lot more stable.

PM Gordon Brown in 2006 said that the key to economic success in a globalizing world is not just stability in monetary and fiscal policy but also “stability through a stable and competitive tax regime”. Yet the UK tax regime has been anything but stable and increasingly less competitive.

For many business leaders, the recent changes to capital gains tax and the tax assault on non-dom workers was the last straw. They have lost confidence in Labour's commitment to stability and competitiveness. Companies and people indeed are voting with their feet. Goodbye U.K. Another good example of why tax competition among nations is a positive benefit for all.

* Find out why smart taxpayers are moving to Switzerland. Just published -- my latest book, Swiss Money Secrets, explores in detail Swiss bank secrecy, low taxes, possible residence for foreigners and current policies. For your copy, click here: LINK: http://www.web-purchases.com/190SSMON/E190J355/landing.html

Treating Americans Like Idiots

There's an old Russian two-person saying describing the master-servant relationship that goes: "I'm the boss, you're an idiot. You're the boss, I'm an idiot."

Well, an "idiot" is an utterly foolish or senseless person or, in psychology, a person of the lowest order in mental retardation. Not a very complimentary term.

But some far Left extremist members of the United State Senate, (to wit, Levin, Dorgan, Coleman and Obama), are treating Americans and American businesses as if we are all idiots -- and they definitely want to be our boss. They pretend to know better what we should be doing and they're ready to force us to follow their direction under pain of double and triple taxation and even criminal sanctions.

I am referring to the unconstitutional, irrational, illogical (and, as the late Senator Strom Thurmond used to say: "What's more I don't like it!") pieces of legislation these radical worthies of the Left introduced in the Senate last year. These bills are just short of a congressional declaration of war against selected countries and without a doubt violate the Bill of Rights and numerous treaties.

Way Bad Bills

This sort of inane legislation is typical of what happens when self-important senators hire a bunch of sympathetic leftist kooks on their committee staff s and give them free reign. "Stop tax havens? Great, draft something!"

S. 396, introduced by Sen. Byron Dorgan, (D-ND), would prevent American companies from deferring taxes on their foreign-source income, as the law has allowed for many years, if they dare to do business in selected low-tax or "tax haven" nations Dorgan doesn't like. The bill would punish offshore companies owned by Americans by directing the U.S. Internal Revenue Code to treat controlled foreign corporations created or organized under the laws of a tax-haven country as U.S. domestic corporations for tax purposes.

The bill audaciously sets forth a list of presumably "bad" countries (because they are recognized tax havens), and grants the the U.S. Treasury (i.e. the IRS) the plenary authority to remove or add a country from this unique blacklist.

S. 681, the Stop Tax Haven Abuse Act, (introduced by Senators Levin [D-Mich], Norm Coleman [R-MN] and Obama [D-Ill]) would establish a legal presumption against the validity of any personal or business transactions by Americans that involve offshore jurisdictions where there are bank and financial secrecy laws. This bill also includes its own bad list of tax havens. In other words, in an unprecedented action, American law would establish an international blacklist of countries simple because they respect individuals' privacy.

The Liechtenstein Affaire

In some Washington circles the current theory is that the adoption into law of these legislative monstrosities will be advanced by the recent media uproar concerning the German government's criminal bribery of a Liechtenstein bank employee.

The German secret police agency, the Federal Intelligence Service (BND), (the equivalent of the U.S. Central Intelligence Agency), paid a €5 million, (US$7.3 million) bribe to this disgruntled employee of LGT Bank in Liechtenstein. The compact disk is alleged to contain the names of German and other nationals with accounts at the bank, supposedly persons evading taxes in their home country -- or so claims the German tax collectors.

The IRS says it is currently initiating enforcement action involving "more than 100 U.S. taxpayers" with names on the stolen CD. The IRS announced that tax collectors in Australia, Canada, France, Italy, New Zealand, Sweden, and the U.K. are working together following the stolen CD revelations. By coincidence, most of the other governments also claimed they also are investigating "more than 100 taxpayers."

Enough to make you believe in global conspiracy theories -- or in canned press releases.

Farmer Grassley Again

Meanwhile, the U.S. Government Accountability Office, at the behest of the Senate's resident busybody, Sen. Charles Grassley (R-Iowa), is conducting an investigation of possible offshore tax evasion by U.S. companies and individuals using the Cayman Islands.

Grassley's bogeyman is the known fact that thousands of corporations are organized in the Caymans in order to take advantage of legal offshore tax breaks allowed under U.S. law. As if an office building was some how sinister, Grassley claims he wants GAO investigators to check on a five-story Cayman Islands building listed as the address of thousands of U.S. and international companies.

He might just as well send the GAO to investigate similar incorporation service buildings in corporate-friendly Wilmington, Delaware, where hundreds of thousands of American corporations are little more than files in a computer.

So what, Senator? Do you take Americans to be idiots?

Criminalizing Foreign Trade & Business

"The main thing that the Stop Tax Haven Abuse Act does is criminalize transactions with particular jurisdictions by creating presumptions that, while rebuttable, could be almost impossible to rebut," says Martin Tittle, a Washington, D.C. based international tax attorney. "For instance, it says that any money that you have in account in an offshore secrecy jurisdiction is presumed to have not been taxed by the U.S. So if you put something into a tiny Swiss bank account 30 years ago, it’s unlikely that you could ever prove that you paid tax on the money you sent there. A taxpayer that does not or cannot rebut these presumptions could be taxed three times on the same income," he said.

"If you read through the Levin bill," says our friend, Daniel Mitchell, senior fellow at the Cato Institute, "...there’s no ‘there’ there, just a bunch of hurdles and restrictions that would make it difficult for Americans to compete in the global economy. And the Dorgan bill clearly imposes a burden on American multinationals that other countries don’t impose. Every multinational will use subsidiaries in places like the Caymans. If U.S. companies are the only ones facing these restrictions, they will be severely hampered in competition." Not to mention abolishing American jobs and making criminals out of innocent offshore investors

Worried Tax Havens

Taking all this Capitol Hill idiocy seriously, the Channel Island of Guernsey, Luxembourg and the Isle of Man have all petitioned the U.S. Treasury to be removed from the list of "offshore secrecy jurisdictions" in S. 681. That's a bit premature, since the Treasury wont have any power over the list unless and until the Congress adopts such garbage as law, and the President signs it. Assuming he is still sane, one would hope George Bush would veto such a mess.

But having served in the U.S. House of Representatives, I stand by the sentiments expressed in an embroidered sampler that used to hang in my House office: "No man's life, liberty or property is safe while Congress is in session." Amen!

* To find out all about places where you may be able to lower or avoid taxes legally, click here http://web-purchases.com/190STHOW/W190H723/

Come on Down to Panama

Head South of the Border for Tax Breaks,
Discounts and Immediate Residency 

A few weeks ago, a local newspaper in Panama reported that 15,491 new companies have been created through a single official government website that allows you to set up quick incorporations online. And that was just in the past eight months.

The report barely raised any eyebrows in Panama. It seems Panamanians are becoming used to this high level of prosperity never before experienced in the country's history.

A major part of this prosperity can be attributed to real estate development and sales. The recent, ongoing real estate boom is by far the largest bonanza in Panama's history. And more importantly, it still continues.

According to Jose Boyd, President of the Real Estate Agents Association of Panama, there are an estimated 250 new skyscrapers under construction in the Panama City area. Plus, builders have already filed applications for another 400 skyscrapers.

''Panama was a well-kept secret. We are now breaking records,'' Boyd told El Nuevo Herald.

Has the Real Estate Bubble Already Burst?

For the last two years there has been talk that the real estate bubble was at the bursting point. But today, the financing, building, and sales go on. Cash continues to pour in from major investors in other Latin nations, the U.S., Spain and Europe.

I'll be returning next month to Panama City for The Sovereign Society's 20th Total Wealth Symposium. I'll be interested to compare the local situation since my last visit in October 2007. This will be one of many visits I have made to Panama in the last 10 years, a period that has seen phenomenal change and growth.

Unfortunately, Panama is no longer the "well-kept secret" that it was when we first started reporting on this small tax haven over 10 years ago. In fact, it seems the whole world has suddenly discovered this strategic nation and its famous American-built Canal. That means if you're interested in buying real estate there, you have to look beyond the sky-high condo prices in Panama City, to the real estate deals still lurking in some of the rural Panama areas such as Chiriqui or Bocas del Toro.

The Most Unique Foreigner Friendly
Laws in the World

One reason for Panama's successful economic growth has been its carefully planned and enlightened laws that are almost unique in the world. These laws welcome foreigners who wish to move to Panama for a second home or retirement, establish a business or make investments.

There are a host of special visas authorized by laws; the most popular of which is the pensionado program. This unequalled program allows immediate residence for foreigners. Plus, the program offers you reduced prices and allows you tax-free import of households goods, motor vehicles, even a boat. You can also secure special real estate tax exemptions when you buy or build in Panama as a foreigner.

All in all, these inducements are unequalled in any other nation. Then add in the beautiful land, ranging from tropical beaches to cool mountains and you'll understand why thousands of Americans, Canadians and Europeans now make their homes here.

Yet Another Reason to Make this Haven Your
Second Home While You Still Can

One topic we will be discussing at The Sovereign Society's 20th Annual Total Wealth Symposium will be the pending changes in Panama's immigration laws.

Recently the Legislative Assembly enacted a new immigration law. This new law seeks to modernize and change the rules that apply to programs governing passports, visas and residency for foreigners.

Insiders I talked with in Panama say the law is designed to protect and tighten Panama's all too porous borders and control the entrance of undesirables. We will have experts on hand in Panama to explain the proposed law and answer questions.

In Panama, they have an interesting process for passing laws. First, they enact general laws, which set down the guidelines on a particular topic. Then later, the executive branch fills out the intent with proposed rules. Then the Legislative Assembly reviews those proposed rules. It tends to be a long process. So it's likely that we won't be able to give you the final form of the new law and rules until September 2008, possibly later.

In the meantime, the existing laws remain in place. But if you are considering establishing a residence in Panama, you should act immediately. It looks like the new law will NOT be as beneficial to you as the current laws. In other words, please start the process now so you can take advantage of the current laws.

We will explain just how to do this at the Total Wealth Symposium, at a special "Citizenship Boot Camp." This is the first time we've had a boot camp on citizenship and residency. And in this special afternoon seminar, special speakers will give you everything you need to know to set up a residence not only in Panama, but in many other tax havens you might want to make your second home.

I invite you to join us. Hope to see you in Panama.

NOTE: Reserve your seat right now for our 20th Total Wealth Symposium, and you can receive a special discount. Click here for details.

EU-Switzerland Far Apart In Tax Dispute

What part of "No!" don't the Brussels bureaucrats of the European Union understand?

For several years the high tax bureaucrats at EU headquarters in Brussels, have complained loudly that low Swiss corporate taxes are some how "unfair competition." Of course, the politicians of high tax EU member countries (France, Germany) would never think of lowering their own taxes in order to compete. They would rather attack the low tax Swiss and smear them as "unfair."

Indeed, studies have confirmed Switzerland to be "a tax paradise" for corporations and holding companies registered there. The country is highly rated by tax experts for its favorable, low tax rates and overall ease of paying taxes

Last week representatives from Switzerland and the EU met in Bern for a third round of "dialogue" on the EU's opposition to low Swiss cantonal company taxes. Under the Swiss federal system each canton sets its own corporate tax rates, and those low rates have attracted thousands of foreigners who have incorporated their businesses in Switzerland.

Because the Swiss are Swiss, they no doubt will continue to meet politely with the EU taxocrats, repeating that cantonal taxes are a matter of Swiss sovereignty and none of the EU's business. The Swiss deny that the 1972 Free Trade Agreement between Switzerland and the EU has anything to do with cantonal company taxes.

The Swiss Federal Council has consistently rejected the EU's interpretation, considering it to be unfounded, and has consequently refused to enter into negotiations. They correctly state that since Switzerland is not an EU member nor part of the common market, EU tax rules do not apply.

*  Find out more about how Switzerland can benefit your taxes, banking, investments and asset protection. Click here http://www.web-purchases.com/190SSMON/E190J355/landing.html

The Great Debate: Tax Havens -- Good or Bad

In the wake of the German government's criminal bribe paid for stolen bank data from Liechtenstein, tax collectors in several countries, including the U.S., are looking into assets allegedly hidden in the principality.

As I predicted, the political Left is doing its best to distort the facts into yet another phase in their long-running anti-tax haven campaign. As usual, the Paris-based Organization for Economic Cooperation and Development (OECD), which listed Liechtenstein, along with Andorra and Monaco, on a list of "uncooperative tax havens" has joined the cry.

Radical critics accuse tax havens of worsening poverty and inequality by allowing the rich to avoid obligations to the societies where they built their wealth. Conservatives argue that tax havens play a positive role in the global economy by forcing governments to stay competitive on tax policy.

The Wall Street Journal asked Dan Mitchell, a senior fellow specializing in tax policy at the libertarian Cato Institute, to discuss the issue with Raymond Baker, a guest scholar at the left-leaning Brookings Institution, where he researches cross-border money flows.

Baker researches and writes about the what he claims are linkages between corruption, money laundering, poverty and inequality. His book, Capitalism's Achilles Heel: Dirty Money and How to Renew the Free-Market System, was recognized by the Financial Times as one of the best business books of 2005. Having read it, I would call it an anti-capitalist, prejudiced screed.

Our friend and associate Dan Mitchell is one of the nation's experts on the flat tax and has been the leading international voice in the fight to preserve tax competition, financial privacy, and fiscal sovereignty. In addition to his Cato Institute responsibilities, Dan co-founded the Center for Freedom and Prosperity, an organization formed to protect international tax competition. Prior to joining The Cato Institute in 2007, Dan served as a senior fellow at the Heritage Foundation. Dan Mitchell earned a Ph.D. in economics from George Mason University and undergraduate and Masters degrees from the University of Georgia.

Their debate is well worth reading and you can find it at: http://online.wsj.com/article/SB120593814650448571.html%20?mod=WSJBlog

British Labour's Tax Boomerang

As we predicted, British Labour's "new soak the rich foreigner tax" is soaking a lot of middle-class foreigners as well -- driving many of them out of the United Kingdom.

Until now, the U.K. has been a major tax haven, but with a different twist - the U.K. gave major tax breaks to wealthy foreigners who actually made their homes there. Under U.K. tax law, anyone living in Britain, "rich" or not, who was not born there had the legal right to choose what is known as "non-domiciled" tax status. That status required taxes to be paid only on income earned or actually brought into the U.K.

That meant scores of billionaires and millionaires living there only paid tax on the relatively smaller amount of money they actually brought into the U.K. each year. They paid no U.K. taxes on their larger worldwide earnings.

These rich foreigners spent billions on real estate, goods and services and invested heavily in the U.K. According to British Treasury figures, about 112,000 people claimed non-domiciled status in 2006. These rich foreigners reported £9.8 billion (US$19.9 billion) in U.K. earnings on which they did pay taxes. But their wealth from overseas income undoubtedly was much greater. "Non- doms" already contribute about 2.7 percent, or £4 billion (US$7.9 billion) of the U.K.'s annual income tax revenue, the Treasury said.

Sock It to 'Em

Now the Labour government has imposed a tax of £30,000 (US$60,000) on any foreigner choosing the non-dom tax status who has lived in the U.K. seven years or more. The higher taxes will cut deeply into the income of middle-class earners, such as college professors and writers and it is predicted that the annual cost tax preparation will double to about £2,000 (US$3900). As a result, foreigners in the U.K. of all levels of wealth are packing their bags and planning to move to far better no-tax havens, such as Monaco, or to places with lower taxes, such as Switzerland.

But Bloomberg News reports that it not only the rich who are being penalized by the $60,000 annual tax.

Francine Stone, born in Pennsylvania, has lived in Britain for 25 years. The researcher on Middle Eastern and Islamic affairs says a new tax on foreign-born residents will drive her out. While the tax plan will extract the most from millionaires, it may make life in Britain unaffordable for people such as Stone who rely on overseas investment income to pay their bills.

"It's the self-respecting, honest, not 'super-rich' people who are being lumped together with the very wealthy,'' said Stone, 63, who's lived outside Wallingford, England, since 1983. "We don't deserve to be targeted." Non-doms who move away may sabotage the plan by cutting the existing tax revenue, said Philip Keevil, senior partner at Compass Advisers LLP and former head of European mergers and acquisitions at Citigroup Inc. The government estimates that about 3,000 people will leave Britain because of the new rules.

Net Loss in Revenue

"It won't take many to leave for the amount the Treasury loses to exceed the amount they will gain from those staying and paying,'' said Keevil, 61. He blames "the politics of envy'' for the notion that foreigners evade taxes. Confusion over the rules is blunting London's attractiveness as a place to settle and do business, said David Treitel, a tax director at U.S. Tax & Financial, a London-based accounting firm, adding: "The politicians think the non-dom changes affect only the wealthy.''

What Labour Party politicians seem not to understand is that taxes are a cost of living and of doing business, just like any other cost. When an individual or business moves away to a tax haven, that revenue is denied to big spending welfare state pols left at home.

Irish Alternative

Some long-established U.K. residents say moving to Ireland may be a good option. Ireland offers the non-dom everything England is taking away, said Jim Ryan, a personal tax partner at Ernst & Young Tax Services in Dublin. Non-doms in Ireland still enjoy the breaks that are disappearing in the U.K. The Irish government estimates that more than 7,000 people live in Ireland as non-doms.

So it looks as if British Labour has finally put an end to "tax haven England." Britain’s loss could be Irelands gain.

This British tax imbroglio serves as a classic example of why tax competition among nations is a positive good. It allows individual freedom of choice and curbs the welfare state’s rapacious appetite for more revenue and spending.

* To find out all about places where you may be able to lower or avoid taxes completely, click here http://web-purchases.com/190STHOW/W190H723/ 

Auditing the Annual IRS "Fear Campaign"

About this time each year, the IRS antics bring to mind the late, unlamented Josef Goebbels. In case you're unfamiliar with the name, Dr. Goebbels was Adolf Hitler's infamous minister of propaganda.

It was Dr. Goebbels who observed: "Propaganda has only one object; to conquer the masses. Every means that furthers this aim is good; every means that hinders it is bad."

Fear was the Nazi stock in trade. They used fear as a potent psychological weapon in their efforts to direct and control the German masses.

And each year, as dependable as the arrival of spring, the fear mongers at the IRS launch into their annual campaign to scare the American public.

The annual campaign begins with a barrage of press releases. The PR specialists at the IRS start sending them three months before the annual income tax filing date, April 15th (a week from today). The press releases are more than just friendly "please file your taxes" reminders. They announce (or you could say "brag" about) the convictions of an assortment of alleged tax evaders. This scare tactic has become a ritual to frighten U.S. taxpayers into paying up.

Based on his many years of experience, my friend, Vern Jacobs, CPA, notes: "Many of these press notices are announcements about successful prosecutions of tax evaders - all carefully timed to coincide with the first three months of the year when folks are working on their taxes or having them done by their accountants. Because tax prosecutions are relatively rare, an unquestioning news media dutifully picks up the press releases and runs them with large headlines."

The IRS Likes to Brag About Their Conquests

Criminal prosecutions for tax evasion are only worthwhile to the IRS because of publicity value. These cases take a long time and cost the IRS far more in time and effort than the added penalties they can possibly collect. In addition, in a criminal prosecution, the IRS has to be able to prove to a jury that the accused taxpayer knowingly and willfully failed to pay their taxes. That's what got actor Wesley Snipes partially off the IRS tax hook.

This has been a bad year for the IRS propaganda machine. In February, the IRS came out on the short end. A federal trial jury failed to find actor and tax protester Wesley Snipes guilty on several tax evasion counts.

The action movie actor was convicted on three misdemeanor counts of willfully failing to file a tax return. He faces up to three years in prison when he is sentenced on April 24th. The IRS went after Snipes for his high profile. And they undoubtedly will prosecute others with "large numbers or loud voices because they're spreading the anti-tax cause," says J.J. MacNab, a writer who monitors tax resisters.

Another "New" Dirty Dozen List - Apparently They're Not Tired of the Old One Yet

For several years now, the IRS has trotted out its ancient "'Dirty Dozen" list - as some sort of keynote to its annual campaign. The list supposedly contains the top 12 worst tax frauds du jour. Quite frankly, the list is pretty entertaining - considering it's the same every single year.

Once again this year, the IRS put offshore financial activity on the list - although offshore has moved down to #5 on the list.

Without offering any proof, the IRS claimed that Americans are hiding trillions in taxable income offshore. That's a ridiculous claim at best - used for dramatic effect. Of course, legitimate international investing and banking is a normal part of doing business offshore.

Also, even in the midst of their glorious tax campaign, the IRS was forced to admit that it's legal for Americans to have offshore bank accounts, credit cards, investments and businesses. (If the IRS can spread their propaganda, then allow me to call attention to that, considering I'm sure few news organizations bothered to report that fact.)

The Tried and Tested Funny Numbers Game

These bogus claims about "trillions offshore" are part of the larger IRS "numbers game." Here's an example of how the IRS plays the game.

When he quit in 2002, then IRS Commissioner Charles O. Rossotti claimed the IRS had identified 82,100 taxpayers using offshore accounts to evade taxes. He also estimated the government lost US$447 million when tax evaders failed to pay their share. That's less than US$7,000 per taxpayer.

But only a year earlier, in 2000, under Rossotti, the IRS estimated that 505,000 taxpayers were using offshore bank accounts to evade taxes (that's about 400,000 MORE than Rossotti said two years later).

By early 2002, the IRS upped that number to two million. It was the same Commissioner Rossotti who, in May 2001, demanded federal court subpoenas for offshore credit card records. In 2001, he claimed offshore tax evasion was costing the government US$20 billion to US$40 billion in 2000 alone! (That's a long way up from US$447 million.)

Meanwhile Jack Blum, a Washington lobbyist and paid IRS propagandist on tax evasion, estimated that offshore evasion cost government US$70 billion annually.

If Only We Could Audit the IRS...

Apparently the IRS Commission can't figure out whether they lost US$447 million or US$70 BILLION (that's only a difference of US$69.5 BILLION). He also can't quite put his finger on whether supposed offshore evaders number 82,000 or 505,000 or two million. That's completely consistent with the way the IRS mishandles most matters. Talk about needing an audit!

The real IRS gap is not one of lost taxes, but the collective one between their ears.

So try and have fun with your Form 1040 and paperwork this week. Don't pay attention to the IRS's scare tactics. Simply fill out your forms as usual, and be done with it.

In fact, the most annoying thing you can do is fill your forms out correctly - then they won't have any PR material for next year's campaign.

P.S. Looking for 100% legal ways to ease your tax burden for next year? This May 14 - 17, we've invited international tax experts to our Total Wealth Symposium to give you an edge over the IRS next year. Over this four day event, our experts will explain how you can use offshore vehicles, offshore residencies and other strategies to cut back on your tax bills for next year's tax season. Plus, sign up right now, and you'll get a special discount for signing up early (a nice bonus if you're already writing a check to the tax man this year). Click here for details.

The Americanization of UBS

What are we to make of the crass stupidity and misjudgment on the part of the mismanagers of the Union Bank of Switzerland -- UBS!?

Whatever happened to that much vaunted, world famous Swiss reputation for financial integrity and careful, conservative investments?

Last week UBS — with $3.1 trillion in assets, Switzerland’s biggest bank — announced that it was taking an additional US$19 billion loss charge that brought UBS’s total write-downs to nearly $40 billion — more than any other bank in the world — and UBS expects to post a first quarter loss of $12 billion. A few weeks ago UBS had to be bailed out with a $13 billion cash infusion from the Government of Singapore Investment Corporation and an "unidentified Middle Eastern investor." But its plans to raise new capital have not quashed fears that the bank, based in Zurich, was facing deeper threats because of its subprime mortgage woes.

UBS’s problems of the last year are a stunning reversal for an institution long known for its staid, conservative style. Beginning in 2005, UBS made a huge bet on mortgage securities, seeking the higher yields they offered and trusting that the AAA ratings they bore would protect the bank from outsize losses. Eventually, UBS’s mortgage portfolio topped $100 billion.

Reputation Is Everything

A well known global survey of private banks published by PriceWaterhouseCoopers (PWC) a few years ago found that the major attraction for a bank’s new customers is its reputation.

Up until now, I was able to write and say with a straight face: "Certainly Switzerland’s solid financial reputation is what has made this impressive nation 'banker to the world,' a unique role it has played successfully for centuries."

The late Margaret Mitchell (1900 - 1949), author of the American civil war classic, Gone With the Wind, once said: "Until you've lost your reputation, you never realize what a burden it was." Well, UBS certainly no longer has the burden of a good reputation and it will be a long time before it regains it -- if ever.

Irate Swiss

In February 6,000 plus shareholders of UBS packed their annual meeting to vent their fury over the billions in losses on American subprime mortgages and what they saw as an insult to traditional Swiss values of prudence and thrift. Much of their anger was aimed at the United States itself — specifically an addiction to high-octane risk-taking, easy credit and dubious financial assumptions that created the American domestic mortgage mess.

"The American El Dorado has become a scene from a Western," declared one middle-aged shareholder, Therese Klemenz. "UBS was the figurehead of Swiss business. As a good housewife, I know you shouldn’t put all your eggs in one basket. A bank is not a casino."

Thomas Minder, a local shareholder activist, was even more outraged. "What happened here is a scandal," he thundered. "You’re responsible for the biggest loss in the history of the Swiss economy. Put an end to the Americanization of the Swiss economy!" At that point, Mr. Minder charged the podium, only to be dragged away by security guards.

Herr Minder was on to something -- with 30,000 employees in the U.S. and billions in American deposits, the truth UBS doesn't want to admit is it has become an American bank -- adopting the same reckless attitudes that dragged down Citibank and destroyed Bear Stearns.

What UBS did was total un-Swiss and is hardly representative of the vast majority of other Swiss banks.

Not Our Favorite Swiss Bank

Long time members of the Sovereign Society know that we never have recommended UBS as a Swiss bank for offshore accounts -- and that was not only because of its monster size and impersonal service. What concerned us is the UBS anti-privacy policy.

The merger of Swiss Bank Corp and Union Bank of Switzerland creating UBS AG was approved by the U.S. Federal Reserve Board in 1999 -- but only after UBS supinely agreed to provide the U.S. government with all information "necessary to determine and enforce compliance with . . . [U.S.] federal laws." This surrender went far beyond the financial information required to be exchanged under the existing U.S.-Swiss Tax Treaty and it also nullified Swiss bank secrecy laws that usually require a court order to release private banking information.

UBS caved in after the U.S. government threatened to shut down the bank's extensive American financial operations. The UBS sell out was bad news for financial privacy seekers - and it blew a large hole in the much vaunted concept of Swiss "bank secrecy."

Then and now we advise U.S. and other potential depositors to avoid UBS AG and any Swiss bank that has active U.S. financial operations and offices beyond a mere "representative office." (A similar privacy killing deal was made between the Fed and Credit Suisse when that leading Swiss bank merged with First Boston).

Switzerland Still Stands Firm

Historically, there has long been a widespread belief that Switzerland is the place to safeguard cash and personal assets, especially in times of trouble. We think that still holds true.

Notwithstanding UBS, it is estimated that currently Swiss banks manage at least one third of all assets held offshore by the worlds wealthy. Total cash assets of the Swiss banking system are estimated at nearly $2 trillion, while the value of total securities deposits are well over $3 trillion. Assets under Swiss management have risen significantly in recent years, reaching a high of nearly US$4 trillion in 2007, according to the Swiss National Bank and the Swiss Bankers Association.

Of far greater significance are the country’s political, financial and economic stability and strength. Many of the world’s leading companies and hundreds of thousands of non-Swiss persons bank with the Swiss. Even the international intermediary banking institution for all other banks in the world, the Bank for International Settlements, is located in Basle, Switzerland.

Switzerland still is home to several hundred banks, including many small private and regional banks and more prudent large banks such as Bank Julius Baer, with branch offices in most of the world’s financial centers, from New York and Panama to Singapore and Hong Kong.

If nothing else, the UBS debacle is a stark warning to other Swiss bankers to stay with their traditional principles and, by all means, avoid Americanization.

* I have just published my latest book, Swiss Money Secrets, which explores in detail Swiss bank secrecy, low taxes, possible residence for foreigners and many other aspects of Swiss history and current policies. For your copy, click here: LINK: http://www.web-purchases.com/190SSMON/E190J355/landing.html

April 15th U.S. Tax Returns Due

Due Date: Tuesday. April 15, 2008:
* In the United States April 15th is the due date for individual income tax returns on IRS Form 1040, 1040NR or an automatic six-month extension obtained by filing IRS Form 4868.
* It is also the due date for partnership Form 1065 or a request for an extension on Form 8736.
* April 15th is the due date for estates to file Form 1041 or to request an extension on Form 2758.
* Trusts should file Form 1041 or a request for extension on Form 8736.
* April 15th is the due date for making payments to an IRA or SEP-IRA retirement plans for the previous calendar year (2007).
* April 15th is the due date for the first quarterly estimated tax payment for individuals.

The Sovereign Society advocates full compliance with applicable tax and financial reporting laws for residents and citizens of all countries. U.S. law requires income taxes to be paid on all worldwide income wherever a U.S. person (citizen or resident alien) may live or have a residence.

Each U.S. person who has a financial interest in, or signature authority over, bank, securities, or other financial accounts in a foreign country that exceeds $10,000 in aggregate value, must report that fact on his or her federal income tax return IRS Form 1040. An additional report must be filed by June 30th of each year on an information return (Form TDF 9022.1) with the U.S. Treasury.

Willful noncompliance may result in criminal prosecution. You should consult a qualified attorney or accountant to ensure that you know, understand and comply with these and any other reporting requirements.

* To find out about offshore havens where you may be able to lower or legally avoid taxes completely, click here http://web-purchases.com/190STHOW/W190H723/

Tax Havens Under Fire

Our friend and associate, Daniel J. Mitchell of the Cato Institute in Washington, D.C. has an interesting audio "Podcast" today on the war against tax havens. It's well worth a listen and you can hear it by clicking here: http://www.cato.org/dailypodcast/podcast-archive.php?podcast_id=585

The Cato Daily Podcast allows experts and scholars affiliated with the Cato Institute to comment on relevant news in a conversational, informal manner. By presenting issues in a concise and engaging way, the podcast invites listeners to rethink their assumptions about liberty and the proper role of government.

Unreal I.D.

The so-called "REAL I.D. Act of 2005" is a U.S. federal law that imposes security, authentication and issuance standards for American state driver's licenses and state ID cards. It is one of the best evidences of the Big Brother Bush's Draconian mentality and brings America close to having to relive those chilling old movies in which the Nazi Gestapo police demand: "Your papers, please!"

Anyone who has ever stood in line at a State Motor Vehicles Agency would know better, but the U.S. Congress stupidly assigned the control and administration of this monstrous new program to just those bureaucratic agencies.  The law federalizes and standardizes state driver's licenses for all 50 states, and it will result in something that has been resisted in this country for a long time -- a de facto national identity card.

And if you don't have the new ID card that the Act requires, you wont be able to board commercially operated airline flights or entering federal buildings. The Real ID Act would impose numerous new burdens on taxpayers, citizens, immigrants, and state governments – while doing nothing to protect against terrorism.

As a result, the law has caused intense opposition from many groups across the political spectrum.  States such as Maine and Idaho have refused to go along with the law, but are now under threat that their citizens will suffer the consequences -- having all their citizens added to "no-fly"`lists.

My Life as Dead Man

A case in point: a couple of years ago my Social Security check stopped being deposited in my bank account. In due course it turned out the Social Security Administration had declared me to be dead. It took four months and intervention by my congressman to get this mistake corrected. Fast forward to this week -- when I realized that my Florida drivers license was about to expire on my birthday, but that I had received no renewal notice as in the past. I went online and had to pay for a copy of my drivers license record, only to discover that my drivers license and, presumable me also, did not exist.

I went to the Florida DMV office and they confirmed that I was dead -- at least to their computers. My guess is that some interface between the U.S. Social Security computers and those of the Florida DMV passed along the erroneous report of my death, but never let them know I'm really alive, (more or less).

My Life in the Balance

So tomorrow I must go back and a DMV clerk will decide: 1) if I am alive; 2) eligible for a new drivers license, and 3) under the terms of the Real I.D. Act whether I will be able to get on an airplane. That's an awful lot of responsibility over my life for a civil service bureaucrat.

George, (Orwell, not Bush), knew this was coming and warned us. But who realizes or even cares as our precious liberties are incrementally leeched away?

Liechtenstein Sells Out

VADUZ: No! -- not in the way some might have suspected (or hoped) -- especially with all that media ruckus after the German government criminally bribed a bank ex-employee to turn over a list of alleged German bank account holders at the LGT Bank in Liechtenstein (Liechtensteinische Landesbank), the bank owned by the principality's royal family. See my comments at http://baumanblog.sovereignsociety.com/2008/02/german-tax-bull.html

But there may be an indirect connection. After the gross German insult, (is there any other kind), to Liechtenstein's sovereignty, Crown Prince Alois von und zu Liechtenstein canceled plans on March 11 to loan royal family artworks to Munich's Neue Pinakothek museum because of Germany's criminal acts. At the time, the Crown Prince criticized German authorities, calling its intelligence methods and bribes an "attack" on the principality. "Germany has clearly failed to understand how one behaves toward a friendly state,'' Alois said.

Not a Fire Sale

But now comes the news that Liechtenstein's ruling family is clearing its castles of as much as €2.5 million euros (US$4 million) of unwanted furniture, objets d'art and paintings today in an attic sale organized by Christie's International in Amsterdam.

The principality's head of state, Prince Hans-Adam II, is selling 463 lots including porcelain and sculptures and 16th century Venetian bronzes. A pair of wooden 17th-century library globes made for the Dutch East India Company by Dutchman Willem Janszoon Blaeu went for €680,000 euros, (US$1.61 million). The estimate before the sale was €300,000 euros (US$4689,000).

Royal Clutter

"I now face the same problem as some of my predecessors. There is just not enough room to either exhibit all those works of art in the museum or to use them for decoration purposes in our private apartments,'' the 15th reigning prince wrote from Vaduz in the auction catalog's introduction. Many of the items were used in palaces and castles of what is now the Czech Republic, he said. The family is running out of space after five centuries of acquiring and displaying art. It canceled the Munich show after Germany paid as much as €5 million (US$7.8 million) for data on account holders in Liechtenstein from the crooked informant.

Having visited the principality a few times and gazed upon its placid scenes, I can attest to the ancient provenance of much that resides in this delightful Alpine retreat. It's a great place to visit and an even greater place to do business and stash your cash and assets -- legally and with all required taxes paid, there and in your home country.

The royal house of Liechtenstein undoubtedly does not need the cash from this extraordinary sale, for they will endure, long after Germany's criminal tax collectors are retired on their welfare state pensions.

* I have authored a comprehensive work, The Liechtenstein Report, that explains the many legal advantages of banking and asset protection there. Click here for more information LINK: http://web-purchases.com/190SLIEC/W190H719/